Question

M.10 Simple interest YAT

Darell deposited $3,000 in a savings account with simple interest. Two years later, the
account held $3,240. What was the interest rate?

Answer 1

4% annual interest rate

Explanation:

Simple Interest Formula

Lets say that P is your starting principal (spelled -pal and not -ple, because Your Money is Your Pal), r is the interest rate (expressed as a decimal), and Y is the number of years you invest. Then your future value will be:

P (1 + rY) (Simple Interest)

P (1 + r)Y (Annually Compounded Interest)